Jan 30 (Reuters) - Sandisk shares rallied on Friday, after the data storage firm projected third-quarter profit and revenue well above analysts' estimates and ​extended a major supply deal, powered by a surge in AI-driven demand ‌for data storage.

Its shares were last up 14.7% at $616.5, building on their roughly 160% jump in January ‌that has made it one of the best-performing stocks on the S&P 500.

The company forecast fiscal third-quarter revenue to be between $4.4 billion and $4.8 billion, and adjusted profit in the range of $12-$14 per share. The midpoints of both were above the estimated $2.77 billion ⁠and $4.37 per share, respectively, according ‌to data compiled by LSEG.

"Earnings are above the long-term trend, but based on our data points it seems likely to stay that ‍way for more than one year - really for as long as the AI trajectory remains this robust," Morgan Stanley analysts said in a note.

Rivals Western Digital, Seagate Technology and industry ​giant Micron Technology have also posted robust gains of late, with memory chip ‌makers emerging among the winners in the AI race so far.

Western Digital also forecast third-quarter revenue ahead of expectations, though its shares were down 5.5%.

With memory chips facing an acute shortage worldwide, AI and consumer-electronics companies are competing for dwindling supplies, a squeeze that is expected to support a multi-year backlog for manufacturers.

Morningstar analysts ⁠expect supply constraints to endure until at least ​2028, which could generate significant growth for Sandisk.

The ​company reported sales of $3.03 billion and adjusted profit of $6.2 per share for the second quarter, both surpassing the estimates.

Sandisk secured its flash chip ‍supply through a joint ⁠venture with Kioxia Corp in Japan and the companies said they have extended their supply agreement through the end of 2034, from its previous ⁠expiration at the end of 2029.

At least five brokerages raised their price targets on the stock, with ‌Bernstein's call of $1,000 among the highest on Wall Street.

(Reporting by Shashwat ‌Chauhan in Bengaluru; Editing by Shilpi Majumdar)

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